Ratings agency makes doom-laden prediction for the housing market
House prices will fall by 12% from their peak by the end of 2024 – while there will be little in the way of a rebound, ratings agency S&P Global Ratings has predicted.
This is due to the impact of higher interest rates and correspondingly higher mortgage rates, as interest rates of 6% are now the norm, making affordability a tough challenge.
S&P said UK house prices will fall by 6.6% in 2023, and then by a further 4.9% next year.
Government data shows that prices have already fallen this year, but so far by a negligible amount.
Between January and May 2023 typical house prices have only fallen by around £2,000, as they still average at nearly £286,000.
But S&P said: “There is still some time to go before mortgage pain reaches its peak.”
Boris Glass, senior economist at SP Global, said: “Even when central banks ease again, mortgage holders and potential buyers will continue to face higher real costs of borrowing that will take a larger share out of their budget and moderate demand for the foreseeable future.”
The Bank of England base rate currently stands at 5.00%, with the next decision coming on Thursday 3 August.
The markets expect further rate hikes in the months ahead, though some hope that we might see a smaller increase of 0.25% come next month.
Otherwise there are fears the UK could be pushed into a recession.